Wall Street Journal

Faced with the same saturated wireless market, the nation’s two biggest telecom companies have placed divergent bets on the future. With its $85 billion agreement to buy Time Warner , AT&T has turned to television while Verizon has looked to Silicon Valley, with its $4.4 billion purchase of AOL in 2015 and pending $4.8 billion acquisition of Yahoo. Both operators are trying to solve the same riddle—each with a different piece of the ill-fated 2001 merger of AOL-Time Warner. They both have millions of wireless subscribers who pay monthly fees to use their networks to share photos, watch videos and tap into social networks. But that wireless business alone lacks the means to drive growth now that the majority of Americans have a smartphone. At the same time, their two smaller rivals are chipping away at their subscriber base.

Two months ago, AT&T Chief Executive Randall Stephenson stopped by Time Warner Chief Executive Jeff Bewkes’s offices in New York for a lunch of salmon, while musing about the increasing convergence of the media and telecommunications industries. During their lunch, Stephenson surprised Bewkes by suggesting that AT&T buy Time Warner, apparently. Bewkes said it wasn’t for sale, but at the right price he would consider an offer, apparently, signaling that a deal was possible.

Stephenson walked away with his mind swirling with the possibilities that Time Warner’s premium content—top brands such as HBO, CNN and Warner Bros.—could bring to the streaming video service he was trying to build. “If you were ever going to do something like this, this is the content you’d like to use as an anchor tenant,” he said. From that point forward, things proceeded at breakneck speed, culminating in the biggest deal of the year as AT&T announced it was buying Time Warner for $107.50 a share—a 36% premium to where its stock was trading before the news of a deal started to trickle out during the week of Oct 17.

The Federal Communications Commission’s 2015 power grab over the Internet is premised on the need for government to allocate broadband scarcity. So much for that. AT&T’s $85.4 billion weekend bid to buy Time Warner is the latest bet, and a very big one, that technology is making wireless broadband ubiquitous despite regulatory obstacles. The real threat to this new era of competition is the President Barack Obama-era FCC.

FCC Chairman Tom Wheeler justified his application of horse-and-buggy Title II regulation on grounds that government needed to drive broadband distribution. Bureaucracies rarely admit mistakes, so the Wheeler FCC might block the AT&T-Time Warner merger merely to prevent a market demonstration that the agency’s regulatory intervention is unnecessary. Yes, bureaucratic actors really can be that self-interested. One business issue worth mentioning is AT&T’s rising debt load to execute the purchase. The company says it has a $40 billion bridge loan commitment over 18 months to finance the cash portion of its half-stock, half-cash offer for Time Warner. But AT&T already has more than $120 billion in debt from its previous acquisitions, and its Standard & Poor’s bond rating is BBB+, close to the edge of investment grade. A downgrade to junk status could raise the company’s borrowing costs considerably. AT&T CEO Randall Stephenson had better hope the combined company’s cash flow can work down that debt burden while the Federal Reserve keeps interest rates at historic lows. Stephenson is making a big play on the wireless future, and his legacy as CEO will depend on how it works out. In a better world, the Obama Administration would see all of this as evidence that Chairman Wheeler’s Internet gatekeeping is misguided and rewrite its Title II supervision. Alas, that will take an end to progressive rule in Washington.

Buying Time Warner will make AT&T among the most heavily indebted companies on earth. In a deal announced Oct 22, AT&T agreed to pay $85.4 billion to buy the owner of CNN, HBO and TNT networks. Including debt, the value grows to $108.7 billion. And to finance the half-cash, half-stock deal, AT&T is taking on $40 billion of bridge loans.

AT&T, the largest nonfinancial corporate issuer of dollar-denominated debt, already has about $119 billion in net debt—roughly double what it was five years ago. “This would put them, I think, within striking distance of the financials with respect to unsecured bond issuance,” says Mark Stodden, a credit analyst at Moody’s. Stodden estimates the carrier’s total debt load will grow to as much as $170 billion if the deal is approved. AT&T hasn’t said precisely how much debt it plans to issue to fund the transaction, but estimates that by the end of the first year after the deal’s close, net debt will be around 2.5 times its adjusted earnings, up from 2.24 times at the end of the third quarter. Most recently, AT&T added to its debt when it bought the satellite-television operator DirecTV in 2015. It also paid $18 billion for wireless airwaves licenses during a 2015 government auction and spent roughly $10 billion buying its own shares in 2014. More spending is on the horizon tooas the carrier is currently participating in a government auction of wireless airwaves.

AT&T’s blockbuster deal promises to reshape the media landscape—if the companies can navigate a series of obstacles, including possible opposition from US antitrust authorities and objections by lawmakers and media and telecom rivals.

Even before the deal was announced, members of Congress, industry groups and Republican presidential nominee Donald Trump began to question it, contending the combination of AT&T’s millions of wireless and pay-television subscribers with Time Warner’s stable of TV networks and programming would limit competition and hurt consumers. Trump said if elected he wouldn’t approve the deal “because it’s too much concentration of power in the hands of too few.” Sen Bernie Sanders (I-VT) called on the Administration to block the merger. Sen Tim Kaine (D-VA), the Democratic nominee for Vice President, said he shared the “concerns and questions” raised by Sen. Al Franken (D-MN) that the deal could lead to higher costs and fewer choices. “Pro-competition and less concentration, I think, is generally helpful, especially in the media.” The Justice Department and Federal Communications Commission both declined to comment.

Some of Republican presidential candidate Donald Trump’s posts on Facebook have set off an intense debate inside the social media company over the past year, with some employees arguing certain posts about banning Muslims from entering the US should be removed for violating the site’s rules on hate speech, apparently. The decision to allow Trump’s posts went all the way to Facebook Inc. Chief Executive Mark Zuckerberg, who ruled in December that it would be inappropriate to censor the candidate, apparently.

That decision has prompted employees across the company to complain on Facebook’s internal messaging service and in person to Zuckerberg and other managers that it was bending the site’s rules for Trump, and some employees who work in a group charged with reviewing content on Facebook threatened to quit, apparently. Trump’s campaign didn’t respond to requests for comment. In a statement, a Facebook spokeswoman said its reviewers consider the context of a post when assessing whether to take it down. “That context can include the value of political discourse,” she said. “Many people are voicing opinions about this particular content and it has become an important part of the conversation around who the next US president will be.” On Oct 21, senior members of Facebook’s policy team posted more details on its policy. “In the weeks ahead, we’re going to begin allowing more items that people find newsworthy, significant, or important to the public interest—even if they might otherwise violate our standards,” they wrote.

After spending nearly $50 billion in the summer of 2015 to acquire DirecTV, AT&T is preparing to roll out an internet video service that could upend its satellite-television business along with the rest of the pay-TV industry.

The service, called DirecTV Now and expected to launch by year-end, will stream dozens of live channels to televisions and mobile devices without the need for a satellite dish, cable box or annual contract. Unlike Netflix or Hulu, this over-the-top service is intended to provide a full cablelike lineup for households. AT&T executives aren’t concerned that a lower-priced internet video service—observers expect around $50 a month—could eat into its existing TV business, which had 25.3 million subscribers who paid an average monthly bill of $117 in the latest quarter. “That means you have found something that the market really, really wants,” Chief Executive Randall Stephenson said.

China’s internet industry is dominated by a trio of giants, and one of the biggest weapons they use to maintain their dominance is their checkbook.

Search engine Baidu, e-commerce company Alibaba and game-and-social-media company Tencent — known collectively as BAT— all have used a combination of minority-stake investments in startups and acquisitions to ensure they don’t miss out on big trends and can build wide-reaching ecosystems that reinforce their core businesses. US internet companies like Facebook Inc. and Google parent Alphabet Inc. also invest in and acquire startups as part of their strategies. But as much as those companies are dominant within specific slices of the internet business—search, social—the collective clout of China’s big three is hard to compare.

Tens of millions of Indian women are finding themselves barred by fathers and husbands from taking advantage of technological leaps that benefit men.

In India, 114 million more men than women have cellphones. That represents more than half the total world-wide gap of around 200 million between men and women who possess phones, according to GSMA, an international cellphone-industry group. Tech evangelists often tout cellular phones and internet access as great levelers—tools that promote equality and ease social disparities. But in countries such as India, the new technology is exacerbating an already deep gender gap. The gulf is blocking women from increasingly crucial ways of communicating and learning, and making it harder for them to find work, upgrade their skills and assert political rights. In India, millions use smartphones to find jobs, bank, study, order train tickets, interact with the government and more. Offline options require freedom of movement not available for many women, and extra time and cost in traveling, standing in lines and filling out forms.

China has proposed strengthening its policies on internet safety for children, which could force technology companies to make substantial operational changes to meet the new requirements.

The draft rules would require online-game operators to lock out anyone under the age of 18 between midnight and 8 a.m. They would also call for an increased number of websites to post warnings about content deemed unsuitable for minors. Few companies will criticize Chinese policies openly. However, industry experts said that a strict implementation of the proposed rules could also force foreign companies to use Chinese censorship software that they can’t control and that could potentially serve as backdoors for Chinese surveillance. The proposed regulations posted online Sept. 30 are vague as to whether companies’ existing parental control systems would suffice or if they would have to use Beijing-approved software.

The Cyberspace Administration of China, the country’s internet regulator, said that it would support the development of web-filtering software to keep children safe online and would determine which products comply with its requirements.